Forecasting in budgeting &Inventory management( Annual ordering & holding EBQ )

First question: I assume that you are asking about the question in our test. If you are then you have copied it wrongly - the question says that the cost this year is 31,000 (not 37,000) You need to restate the cost 3 years ago at current prices. i.e. 8,800 x 164/132 = 10,933 Now you can apply high-low technique in the normal way. So the variable cost = (31000-10933)/(5,000-2,000) = 6.69

Second question: Again you have copied this wrongly. The question asks for the minimum total cost - not the maximum total cost. First you need to calculate the EOQ using the formula. D = 4 x 5,000; Co = 20; Ch = 5. So the EOQ = 400. Then you can calculate the reorder cost (20,000/400 x 20) and the holding cost (400/2 x 5). (The free lecture on inventory control will help you)

Third question: You have typed the question wrong - the holding cost is $2 per unit (not $20) You need to use the EBQ formula from the formula sheet. D = 6,000 R = 12 x 5,000 = 60,000 Co = 600 Ch = 2 If you put these figures into the formula then the answer comes to 2,000

Thank you very much,MrJohn Moffat in helping as the calculation was a bit difficult after several trial to get the answer.

You are welcome :-)

Dear Mr.John Moffat, Can you assit me in answering the Acca June 2006 past exam question number 20 & 21 on process costing: 20.A company operates a process costing system using the first-in-first-out(FIFO) method of valuation.No losses occur in the process.All materials are input at the commencement of the process.Conversion costs are incurred evenly through the process. The following data relates to last period: Units Degree of completion Opening work in progress 2,000 60% Total number of units completed 14,000 Closing work in progress 3,000 30% $ Cost arising: Materials 51,000 Conversion 193,170 what was the total number of units input during last period? A.12,000 B.13,000 C.15,000 D.17,000 (i tried after several attempt, and get 15,000,is it right) 21.What was the value of the closing work in progress for last period? A.$.21,330 B.$.21,690 C.$.22,530 D.$.22,890 (unable to get the answer) Thanking you in advance Can you please explain to me the prevoius question on effective interest rate from opentuition mock exam.need for cbe very soon to be sat.

In future please start a new thread when you are asking a question on a different topic - this has nothing to do with budgeting or inventory management. (It is because we want everyone to be able to benefit from answers - we cannot simply be free private tutors) The ACCA does not publish past exam questions for Papers F1, F2, and F3 and so I do not know how you can say that these questions are from the June 2006 past exam! The answer to your first question is correct (15,000). For your second question, the cost per finished unit for materials is 51,000/(12,000+3,000) = $3.40 The cost per finished unit for conversion costs is 193,170/((40%x2,000)+12,000+(30%x3,000)) = $14.10 So the value of the closing WIP = (3,000 x $3.40) + (3,000 x 30% x $14.10) = $22,890 (I do suggest that you watch the free lectures on process costing!) With regard to your previous question that you refer to in your last sentence, I think I have answered all of your previous questions. (I saw that you had asked for an electronic copy of a revision kit to be emailed to you. Sharing electronic copies is illegal and unethical - it is theft - and must not happen via this website. For that reason your post has been deleted. You must buy a revision kit - it is essential to practice from a revision kit before attempting the exam (as we make very clear throughout this website)

Topic Process costing:FIFO valuation Thank you for help.

I still do not know which question of yours that you are referring to.